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Business Regulation Paper

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Business Regulation Paper

Organizations are sometimes subjected to risks associated with negligence either internally or environmentally. Environmental negligence can have a substantial impact on the communities around them. Government regulations have been put into place to protect the environment, the community, and the organization. Many organizations are embracing these regulations and have become responsible and respected in business in order to stay in business. An examination of the basic concepts of regulatory law, the impact of the regulatory environment on industry and organization risks, the legal decision in the context of the organization’s values and ethics and key facts, regulations, and other legal issues will be discussed on the impact these have on organizations. An examination of any ethical dilemmas and conflicts among stakeholders will also be discussed.

Key Facts

The key facts from the scenario are that Alumina is an aluminum maker and has business interests in automotive components and manufacture of packaging materials, bauxite mining, alumina refining, and aluminum smelting. Alumina is under the jurisdiction of region 6 of the Environmental Protection Agency (EPA). Alumina had an environmental discharge that violated the EPA compliance five years ago. The PAH concentration in test samples was above the prescribed limit. Alumina fixed the problem and has been in compliance for over five years. This is the only incident on record and since then Alumina has had a good overall environmental record. Kathy Bates reports that daughter contracted leukemia from this environmental issue that Alumina has done and accused Alumina of repeatedly contaminating the waters of Lake Dira with carcinogenic effluents (University of Phoenix, 2002).

Basic concepts of regulatory law

Environmental regulation remains the single most expensive area of government’s regulation of the business community. Environmental and pollution-control laws govern regulation on three levels such as government’s regulation of itself, government’s regulation of business and suits by private individuals (Reed, et al., 2004, p. 507). The federal government has enacted a series of laws regulating the impact of private enterprise on the environment. More and more companies are hiring environmental managers to deal with environmental compliance issues. Congress may fine-tune environmental acts, but the national commitment to a cleaner environment is here to stay (p. 512). The Environmental Protection Agency (EPA) was founded in 1970 as a response to concerns about the environment (p. 513).


Alumina needs to see if the environmental impact is still in compliance with the EPA. They currently use the best technology available for pollutant cleanup in compliance with the Clean Water Act (University of Phoenix, 2002). The principal federal law regulating water pollution is the Clean Water Act, passed by Congress in 1972. The Clean Water Act is administered primarily by the states in accordance with EPA standards, however, the federal government, through the EPA, can step in and enforce the law. The Clean Water Act applies to all navigable waterways, intrastate as well as interstate (Reed, et al., 2004, p. 519). The law sets strict deadlines and strong enforcement provisions, which must be followed by industry, municipalities, and other water polluters. Industries must adopt a two-step sequence for cleanup of industrial wastes discharged into rivers and streams. The first step requires polluters to install best practicable technology (BPT) and the second process demands installation of best available technology (BAT) (Reed, et al., 2004, p. 521).

Alumina did a self site study and reported that the polycyclic aromatic hydrocarbons or PAH levels are lower than the prescribed five milligrams per liter for all hydrocarbons. Their current position is that the possible contamination is cause by run off from highway traffic. The increased traffic study found that the PAH concentrations to be 100 times greater than pre-urban conditions and pose a danger to animal, aquatic, and human life (University of Phoenix, 2002). The Clean Water Act and other current statutes do not reach one important type of water pollution: nonвЂ"point source pollution, which comes from runoffs into streams and rivers. These runoffs often contain agricultural fertilizers and pesticides as well as oil and lead compounds from streets and highways (Reed, et al., 2004, p. 521).

Legal Issue

The legal issue with Alumina and Kathy Bates is who is responsible for the daughter’s illness and whether Alumina had caused any real damage. The attorney for Alumina needs to determine if a case can be brought to the judicial system and the damages that can be cause by such an action. Bates approached the EPA to get hold of the environmental audit report that documented Alumina’s violation of the Clean Water Act five years ago. Under the Freedom of Information Act, citizens can request information related to federal agencies and corporations. The legal counsel has advised Alumina to withhold Confidential Business information but do allow partial release of environmental audit report (University of Phoenix, 2002).

Impact of the regulatory environment on industry and organization risks

The four concepts that are of great significance to the regulatory environment of business are separation of powers concept, the supremacy clause, the contract clause, and the commerce clause (Reed, et al., 2004, p. 144). The separation of powers concept refers to the fact states cannot interfere with federal guidelines. Under the supremacy clause, courts may be called upon to decide if a state law is invalid because it conflicts with a federal law (p. 144). The contract clause is a clause from the Constitution (Article 1, Section 10) which says, “No State shall . . . pass any . . . Law impairing the Obligation of contracts” (Reed, et al., 2004, p. 148). The power of the federal government to regulate business activity is found in the commerce clause of the Constitution. Article I, Section 8, states “Congress shall have Power . . . to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” (Reed, et al., 2004, p. 148).

The legal decision in the context of the organization’s values and ethics

Ethical (or moral) values underlie much law, including the law of how business operates and is regulated, making it important for business students to know about



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